B&M European Value Retail Lowers Guidance , Shares Fall

B&M European Value Retail S.A. (LON: BME) has revised its FY26 adjusted EBITDA guidance downward, despite positive December sales figures.

The company is proactively investing in pricing and strategic stock clearance, impacting near-term financial results.

B&M shares are down around 2.9% following the update.

The retailer now anticipates FY26 adjusted EBITDA (pre-IFRS 16) to fall between £440 million and £475 million, a reduction from the previous forecast of £470 million to £520 million. This adjustment reflects ongoing investments in pricing, clearing discontinued lines, and addressing underperformance at its Heron Foods subsidiary. The company's shares may experience volatility as markets digest the revised outlook.

Revenue performance shows year-to-date group revenue grew 3.6% year-on-year (YoY), or 3.3% on a constant currency basis. For Q3, group revenue growth stood at 2.9% YoY (2.6% constant currency). B&M UK saw a 1.9% total revenue increase in Q3, with like-for-like (LFL) sales declining by 0.6%. A notable 3.0% LFL growth was achieved in December, suggesting initial success from pricing strategies.

The company's focus on “Back to B&M Basics” involves reducing SKU counts and improving on-shelf availability. These initiatives aim to restore sustainable LFL growth at B&M UK within the next 12 to 18 months. The markets are evaluating whether these operational changes will translate into long-term value creation.

Driver Breakdown:

• Pricing Investments: Proactive price reductions in FMCG to strengthen value proposition.
• Stock Clearance: Strategic disposal of discontinued lines to streamline inventory.
• Operational Improvements: “Back to B&M Basics” initiative targeting SKU reduction and improved stock availability.

CEO Tjeerd Jegen stated, “We entered our Golden Quarter sharper on price to reinforce our value proposition with our customers,” highlighting the company's commitment to competitive pricing.

B&M France continued its positive trajectory, with total revenue growth of 8.5% and LFL revenue growth of 0.4% in Q3. However, Heron Foods' performance fell short of expectations, prompting a review of its customer proposition. Markets will be looking for signs of improvement in Heron Foods' performance in subsequent quarters.

The company is addressing past issues, having completed a third-party review of IT systems and balance sheet controls related to overseas freight costs. Recommendations from the review are being implemented to enhance operational processes.